Why will Friday be a day of reckoning for KPMG?

The KPMG scandal centres on allegations that the firm's senior partners misused confidential client documents. (ABC News: Maren Preuss) Link copiedShareShare articleAccounting firm KPMG is engulfed in a scandal that has seen several senior leaders quit their roles and the corporate watchdog launch a formal investigation into the firm's business dealings. It all centres on an internal whistleblower's allegations that some of the firm's senior partners misused confidential client documents. The audit scandal has led to a "who's who" of current and former senior leaders from KPMG being hauled before a parliamentary hearing, due this Friday, June 19. Here's what has happened so far and what we can expect on Friday. A KPMG whistleblower raised concerns with the firm's senior leadership team in 2024 that confidential board papers from construction giant Lendlease were used to pitch for and win audit contracts from other firms, including Westpac and Dexus. An internal investigation did not substantiate the claims, with a further external investigation by legal firm Ashurst supporting the initial outcome. However, after the whistleblower raised further complaints with the board, a different external law firm, Allens, was appointed to complete another investigation into the claims, which is ongoing. It has already uncovered secondary instances of inappropriate document sharing. Deborah O'Neill believes the claims are in the public interest. (Four Corners) In March, with the protection of parliamentary privilege, Labor senator Deborah O'Neill aired the claims. "I thought this would be in the public interest," she told ABC News. In May, KPMG chief executive Andrew Yates and audit partner Julian McPherson quit their roles over the handling of the whistleblower's allegations. KPMG chief executive Andrew Yates quit his role in May. (ABC News: Ian Cutmore) KPMG released a statement apologising to the whistleblower, saying the initial investigations "fell short of the firm's expectations". Chief operating officer Eileen Hoggett was also demoted from her role. The "big four" firms advise business and government and it costs taxpayers big bucks. "Ernst & Young, Deloitte, KPMG and PWC have earned about $21 billion in taxpayer-funded contracts over the past 10 years," said Andy Schmulow, a law professor at the University of Wollongong. The federal government alone currently has 297 active contracts with KPMG, worth $653 million, according to Parliamentary Library research released by the Greens. Parliamentary library data reveals the federal government has almost 300 active contracts with accounting firm KPMG, which is being investigated over claims it misused confidential client information. And a similar scandal has happened before. Fellow accounting giant PWC was found to be misusing confidential government information to help multinationals avoid tax. The arm dealing with public contracts was sold off for a dollar in 2023, and PWC currently does not bid for any federal government contracts due to a non-compete clause. The corporate watchdog, ASIC, last week confirmed it had launched a formal investigation into three registered auditors who handled the whistleblower's complaint at KPMG. Eileen Hoggett was demoted from her role as chief operating officer, but remains with KPMG. (Source: kpmg.com) It named former chief operating officer Eileen Hoggett and audit partner Paul Rogers as two of the individuals it is investigating, while it is also looking into other individuals. ASIC Chair Sarah Court told a Senate estimates hearing last week that its focus would be to determine whether the conduct sanctioned by KPMG may be a breach of the duties of a registered company auditor in accordance with the Corporations Act. However, AISC admitted there are limits to its jurisdictional reach in relation to partnerships such as KPMG. More than 30 witnesses, including KPMG senior leadership, clients, regulators and industry bodies, will be heading to Canberra on Friday. KPMG staff include chair Martin Sheppard, interim CEO Stan Stavros, former CEO Andrew Yates, former COO Eileen Hoggett and other former and current partners, two current independent board members, former independent board member (and former NSW premier) Mike Baird, and international leaders. There is also a mystery KPMG witness, who is unnamed, who oversaw the internal KPMG investigation. Lendlease CEO Tony Lombardo and chair John Gilliam will also appear. The construction giant is the only client to publicly confirm KPMG misused its documents. Also appearing are partners from the law firms Ashurst and Allens, as well as the regulator, ASIC. Greens senator Barbara Pocock wants to confirm if any more KPMG clients had their information inappropriately shared. "This inquiry is about getting to the bottom of what happened, to understand exactly what the unethical behaviour was and who was involved, as it appears there were a lot of players inv

Why will Friday be a day of reckoning for KPMG?

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